Gorshkov price deal unlikely during PM's visit to Russia

No end seems to be in sight in the protracted price negotiation for Admiral Gorshkov aircraft carrier and the deal is unlikely to be clinched even during Prime Minister Manmohan Singh's visit to Moscow next month, increasing uncertainty over its timely delivery in 2012.

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PTI

New Delhi

November 27, 2009

UPDATED: November 27, 2009 22:08 IST

No end seems to be in sight in the protracted price negotiation for Admiral Gorshkov aircraft carrier and the deal is unlikely to be clinched even during Prime Minister Manmohan Singh's visit to Moscow next month, increasing uncertainty over its timely delivery in 2012.

"No, it will not," Defence Minister A K Antony told reporters here on Friday on the sidelines of an Institute of Defence Studies and Analyses (IDSA) event, when asked if the price deal would be concluded during the Prime Minister's State visit to Russia in December.

Defence Ministry officials, when queried about the price talks, said only two defence agreements would be signed during the Prime Minister visit to Russia...to extend military and technical cooperation by another 10 years to 2020, and for assured after-sales maintenance and spare parts supply of Russian defence equipment used by the Indian Armed Forces.

The Russians have been demanding an additional $2.9 billion for the 45,000-tonne Gorshkov.

"The talks for a new price could go into next year," the officials said, when asked when it would conclude.

The Kiev-class warship, for which India signed a contract with Russia in 2004 for $974 million, was originally scheduled for delivery in 2008.

Russian Sevmash shipyard, where Gorshkov is going through refit and refurbishment, hiked the price -- first to $2.2 billion in 2007 and later to $2.9 in February this year -- to complete the work on the warship.

India, in between, also paid about $650 million to the shipyard in two instalments for the repair works being carried out on the ship under the original 2004 deal.

Since 2007, the Indian side has held a series of talks at various levels on the escalating costs and delivery delays with the Russians, including during Defence Minister Antony's visit to Moscow last month.

At present, India is keen on bringing down the additional cost of Gorshkov, rechristened as INS Vikramaditya in 2004, to about $2.2 billion.

India plans to have the Gorshkov -- along with 16 MiG-29K fighter jets bought in 2004 for $526 million -- by 2012 before the Navy's lone aircraft carrier INS Viraat is decommissioned from service.

It is also building an Indigenous Aircraft Carrier (IAC) at its Cochin Shipyard in Kerala and the first in the series of three IACs is likely to be delivered by 2015.

In its latest report, the CAG has pulled up the Defence Ministry for the "300 per cent" increase in the cost of the "second hand" aircraft carrier to $3.9 billion whereas a brand new aircraft carrier was available at about $4 billion to $5 billion.

However, the Navy's argument in favour of Gorshkov has been the unwillingness of other countries building aircraft carriers to sell their warships to India.

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